Shippers and carriers align on goals and outlook

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by Emily Atkins

The quality of relations between shippers and their third-party logistics suppliers have declined this year in the post-pandemic chaos.

The latest edition of Penske’s annual Third-Party Logistics Study with research by CSCMP, paints a picture of slightly declining (down seven percent) contentment from shippers, while the service providers remain happy. Still, with 83 percent of shippers agreeing their relations with 3PLs are successful, it seems they are mostly getting it right.

Tech is key

A majority of shippers (71 percent) say using a 3PL improves customer service, and provides access to innovative logistics solutions. Shippers count on 3PLs to provide up to date technology. The study tracks 19 different information technologies and 14 of these have been pinpointed as must-have by the shippers surveyed this year. The most frequently cited are transportation management planning (62 percent), transportation management scheduling (57 percent) and warehouse/distribution centre management (48 percent).

Three quarters of shippers say technology solutions are now more important in their evaluation and selection of 3PL partners. From the other side of the table, 87 percent of 3PLs said shippers have placed a greater emphasis on technology solutions during their evaluation and selection process.

Labour

Among respondents, 56 percent of 3PLs and 78 percent of shippers said labour shortages impacted their supply chain operations. Opinion is split, however, on whether the talent shortage is going to be a long-term problem. Both groups say they are looking into automation and new technology to help alleviate the labour crunch.

The toughest workers to find and retain are certified, licensed hourly workers, such as truck drivers and equipment operators, as well as hourly workers, such as pickers and packers, according to both 3PLs and shippers. Almost half of both groups say it can take two to three months to fill hourly positions. Management positions are even more of a challenge, with 61 percent of 3PLs reporting it takes two to three months, compared to 49 percent of shippers.

The shortage may be helping 3PLs. Almost three quarters of service providers and half of shippers say that engaging a 3PL is a strategy being adopted to help offset it.

Cold chain heats up

Demand for temperature controlled space and services is on the rise. Increased consumer demand, rising competition and advances in technology are all expected to shape the cold chains of the future as 3PLs and shippers attempt to meet high expectations for deliveries.

Shippers and 3PLs both see increased competition leading to an increase in capacity over the next three years. About 60 percent of shippers and 3PLs expanded their cold chain capabilities in the last year. As well, 67 percent of shippers and 72 percent of 3PLs plan to continue to expand their cold chain capabilities and capacity in the next three years. A majority of both groups also foresee more outsourcing of cold chain needs over the next three years.

Returns rising

A majority of shippers, both in the business-to-business and business-to-consumer space, see customers’ expectations of the returns experience rising. B2C shippers also expect the rate of returns to continue climbing, with 61 percent predicting the increase in demand, driven by growth in online purchases and direct-to-consumer shipping. At present, the majority of shippers handle returns in house, the report found. A third said they plan to outsource more reverse logistics over the next three years.

ESG goals

Achieving environmental, social and governance (ESG) goals is becoming more important. Reducing environment and climate impacts; improving diversity, equity and inclusion (DEI); and social contribution and responsibility; along with the need to meet regulatory requirements and mandates drive this area.The study found that shippers are ahead of 3PLs in their ESG initiatives, with 22 percent of shippers rating themselves as ESG leaders, compared to 17 percent of 3PLs. As well, 45 percent of shippers said their organization is about average in its ESG practices compared to 41 percent of 3PLs.

Inventory

The study also asked shippers about inventory challenges post-pandemic. Shippers are actively working to rebalance inventory levels, with 81 percent saying they’ve already taken action. They are also adjusting their supply practices, with 80 percent reporting they are rebalancing production locations to move towards more regional or domestic production networks.